Regal manage 5 strategies, largely geared towards alternative mandates (i.e. long/short, agriculture etc) with FUM as at the end of the 3Q of $5.5b. While they tend to have a higher fee structure than peers, Regal’s specific strategies justify the numbers. In the first 3 months of the calendar year, they had inflows of $200m, with net flows for the first 9-months just shy of $900m well and truly on track to beat their $1b net inflow target for the year.
They have recently added new Ag and Resources funds to their offering, along with the acquisition of East Point Asset Management which supports future FUM growth while we expect the company to remain acquisitive given the ~$200m in cash on the balance sheet which could add around 30% to EPS. Earnings will also be lifted next year as they move non-fee paying FUM (mostly staff investment) into charging 50% of the base management and performance fee level, adding ~$5m in management fees. Overall, we continue to like Regal which we expect to grow regardless of underlying market conditions.
MM is bullish RPL and long in the Emerging Companies Portfolio
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